May 17, 2011

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Dear ,

In football terms, it's fourth quarter time at the Texas Legislature and the "two minute warning" just sounded, meaning the end of the game is quickly approaching.

The good news is we're still in the game and we're making significant progress with our legislative agenda. We’ve spent a great deal of time engaging a number of bills and offering amendments on many others to avoid unintended consequences for our industry and the real estate market. Fortunately, our good will and talented team of volunteers has proven to be very effective when sharing our perspective with others who are pushing their own legislative initiatives.

That being said, I want to take this opportunity to thank those incredible volunteers. You're the real key to our success - from our Day at the Capitol program in February, to the numerous committee hearings you've watched and participated in and not to mention the countless letters you've sent and phone calls you've made to your elected officials on behalf of the industry. We're reminded every day we walk through the Capitol halls that we wouldn't be here if it weren't for you, so thank you - thank you for your tireless dedication, persistence and willingness to stay involved and make a difference in our industry. 

In closing, I wanted to mention a few other things. In June, we'll be presenting a full legislative session recap at our Annual Conference & Business Meeting in San Antonio, in addition to our comprehensive legislative report, which we'll publish in July. We're looking forward to some great speakers at the conference, including an informative and entertaining interview of Land Commissioner Jerry Patterson by Texas Tribune Editor-in-Chief and CEO Evan Smith. President Gerald Ford's son Steve Ford will also be there to discuss his life inside the White House as well as his career as an actor. For additional details about this year's Annual Conference & Business Meeting you can view the conference program and register here.

Until next time, have a prosperous May and again, thank you for your continued engagement as we work toward the end of a very long and involved legislative session. 

Sincerely,

Aaron Day

P.S. - TLTA’s Race to the Finish is back and let it be known, I’m determined to keep my title! Make a pledge today! 

REGULATORY 

TDI Issues Call for Agent Stat Data – June 9 Deadline

The Texas Department of Insurance (TDI) has issued its call for agent statistical data for the year 2010. The completed report must be postmarked or submitted electronically by June 9, 2011. You may read the bulletin and download all of the necessary forms here.

Need help filling out the form or want a refresher? It's not to late to register for our webinar tomorrow at 10 a.m. called On-Time & Error-Free Stat Reporting: Be in Compliance. Our experts will walk you through the steps to complete the report and discuss the format for filing. Join TLTA for this webinar in the morning and then again in the afternoon for a Q&A session to get your specific questions answered by our panel of experts. Make sure you stay complaint - don’t miss this important webinar!

Register Online | Download Registration Form

TDI Quarterly Audit Results Published

One of our goals is to help you understand and stay compliant with TDI rules and regulations. Below is our report highlighting recent TDI audits, violations and enforcement actions from December 2010 to February 2011. You may view TDI's complete summary of operations for the quarter or read the key statistics below.

Compliance Audits
TDI's goal is to comprehensively audit agencies at least once every two years. Through February, 545 out of the 582 licensed agencies have been audited in the last two years, a 93.6% rate. Twenty-five additional agencies have been audited within the last three years and 12 new agencies have not yet been audited.

Commissioner Orders & Active Cases
From December 2010 through February 2011, TDI Commissioner Mike Geeslin signed 27 orders resulting in fines and the revocation of 4 licenses. Through February, 135 cases remain active, including 38 cases involving Texas Insurance Code violations, 24 cases involving the misappropriation of fiduciary funds and 18 possible license revocations.

Compliance Audit Results
Below are TDI’s most common audit findings from December 2010 through February 2011. The numbers represent how many agencies had an infraction, not the number of times the infraction occurred.

NUMBER OF AGENCIES
CATEGORY
DESCRIPTION
36
Texas Insurance Code Section 2702.053
Actual receipts and/or disbursements not in agreement with settlement statement or premium split not disclosed
31
Escrow Accounting
Outstanding checks not cleared timely
23
Procedural Rules
P-21: Schedule D of commitment not in file or premium split not disclosed on commitment
21
Minimum Escrow Accounting Procedures & Internal Controls
Every disbursement not supported by invoice or sufficient other evidence
19
Guaranty Files
Legal documents not recorded timely with county clerk or evidence of timely recording not on file.
19
Guaranty Files
Funds not disbursed or escheated to state
17
Bulletins
Title Bulletin No. 160: All parties receiving portions of the real estate commission not disclosed on settlement statement.
17
Procedural Rules
P-22: No T-00’s in files or T-00’s incorrect or incomplete
16
Rate Rules
R-1: Unauthorized fee charged for closing (or tax search) in addition to premium

Did you know?
TLTA has education that can help you avoid TDI enforcement actions, such as our recent Webinar Replay Audit Survival: TDI, Underwriter and Annual Independent Audits. Register for that Webinar Replay here or view our other archived webinars.

Title Industry Wins Significant Rate Battle in New Mexico

A New Mexico appeals court affirmed the dismissal of a five-year battle attempting to have courts declare regulation of title insurance rates in the state unconstitutional.

In this litigation, plaintiffs challenged New Mexico’s statutory scheme regulating title insurance, arguing it is contrary to state law. However, the United States 10th Circuit Court of Appeals upheld the decision by the United States District Court for the District of New Mexico to dismiss claims against several title insurance companies that have complied with New Mexico law. Read the full story.

TEXAS LEGISLATIVE NEWS 

TLTA Legislative Update: First TLTA Affirmative Agenda Item Passes Both Chambers

Last week, the House unanimously approved Senate Bill 1496 which clarifies the validity of correction documents in the conveyance of real property. The bill is now on its way to the Governor and if signed, will go into effect later this year.

On Thursday night, with just a couple of hours left before the deadline for getting bills passed out of the House this session, the Texas House approved House Bill 2408, TLTA's legislation designed to improve and streamline the current rate hearing process at TDI as well as put administrative process protections in place for the industry. Our lobby team also successfully got the H.B. 2408 language placed as an amendment on the TDI Sunset bill, House Bill 1951, before the bill passed out of the House last week. We now have two ways to get this legislation passed in the Senate, increasing our chances of being successful with this important legislation that will improve processes and protect our industry.

We encourage you to visit our 82nd Legislative Session page for detailed inform about the rest of our affirmative legislative agenda in addition to other bills of concern to the industry that we are monitoring.

ON THE FEDERAL FRONT - ALTA REPORT

The following news and information is provided by the American Land Title Association and includes information on their advocacy efforts on behalf of the industry nationwide.

GSE Reform Legislation Requiring Title Insurance Introduced

A new bi-partisan GSE reform bill was introduced last week by Representatives John Campbell (R-CA) and Gary Peters (D-MI). Many Washington insiders see the new bill as a possible template for GSE reform. Importantly for the title industry, the proposal includes the following ALTA backed requirement, "(b) COMMON LABEL; STANDARD TERMS AND CONDITIONS...and shall include a representation and warranty certifying that a policy of a title insurance be in place to transfer title-related risks to State licensed title insurance companies for all conventional mortgages collateralizing a Federal Housing Finance Agency security." While the future of this particular bill is uncertain, its title insurance language is further evidence that Members of Congress from both parties agree with the common sense idea that collateral underwriting standards need to be maintained in the future housing finance system. 

This week, the Senate Banking Committee will continue its methodical examination of the GSE reform issue with a hearing on the state of the securitization market. Meanwhile, the House Financial Services Committee staff is putting the final touches on the next set of small GSE reform bills. We will continue to keep you updated on any new developments.

RESPA Round Up: HUD Provides GFE, HUD-1 Guidance

The U.S. Department of Housing and Urban Development recently provided additional guidance for those concerned about tolerance cures and other good faith estimate and HUD-1 Statement issues. View HUD’s recent RESPA Round Up with more detail.

CFPB Update: Model Mortgage Form to be Tested in 6 Markets

The CFPB has invited ALTA and other interested trade groups to the unveiling of its first crack at a combined RESPA/TILA disclosure. Professor Elizabeth Warren and the team at CFPB have been working over the last six months to develop a one page shopping document to help consumers understand their mortgage at the time of application and to shop for the best deal. CFPB has said previously that this reform will be an iterative process and will include five rounds of testing. As HousingWire reports, the agency will test the form in six markets: Albuquerque; Baltimore; Birmingham; Chicago; Los Angeles; and Springfield, Mass.

In the House Financial Services Committee, the CFPB continues to have to defend itself from what Professor Warren styles as threats to its independence and power. The Committee sent legislation to the full House of Representatives that would replace the CFPB's Director with a five-member, bipartisan commission, make it easier for safety and soundness regulators to veto CFPB rules, and delay the CFPB's go live date until a Director is confirmed.

On the Director front, last week's rumor that President Obama is considering using a recess appointment to install Warren as the CFPB's Director is garnering enthusiastic support from consumer groups. Meanwhile another potential Director candidate, FDIC Chairman Sheila Bair, announced this week that she would step down from her post at the FDIC on July 8th.

With the CFPB's grand opening still two months away, another controversy is developing, this time over what to do with the data and consumer complaints the CFPB is planning to collect. Banks are urging the CFPB to keep the information confidential to avoid unwarranted damage to their brands, while consumer groups are urging that the information be made public.

ALTA Meets With FTC Officials to Discuss CFPB Functions

ALTA recently attended a meeting at the US Chamber of Commerce with David Vladeck (Director, FTC Bureau of Consumer Protection) and Richard Cordray (Chief Enforcement Officer, CFPB) where they gave their perspectives on the agencies' overlapping authorities and their efforts and plans for mitigating regulatory and enforcement duplication. Vladeck and Cordray said they are aware that there may be some duplication between the FTC Bureau and the CFPB, and want industries to reach out to them about how these departments might impact your business as they continue to work on what the new CFPB will look like.

Officials Criticize Qualified Residential Mortgages Rule

The comment period for the banking regulators' new QRM rules doesn't end until June 10th, but if this past Thursday's House Financial Services Committee hearing is any indication, the regulators should be bracing for an earful. The officials from the FDIC, Federal Reserve, FHFA, FHA, OCC and SEC who went up to Capitol Hill to explain with criticism from all sides, including poignant disapproval from the Senators who wrote Dodd-Frank's QRM requirement.

Some of the strongest criticism is in response to the proposed 20% down payment requirement which would prevent a large segment of borrowers from qualifying for a QRM loan. Estimates are that only 20% of current mortgageswould meet the QRM definition. This white paper written by the Mortgage Bankers, Realtors, Mortgage Insurers and the Center for Responsible Lending, concludes that based on current home values, it would take 14 years for a typical American family to save the 20% down. These harsh realities have some lawmakers and even some of the regulators already rethinking the rule. 

Action Alert: Support the Flood Insurance Reform Act of 2011

Flooding continues to impact homeowners and businesses nationwide, and it is imperative that homeowners and buyers in these flood prone areas have access to affordable flood insurance. Although the National Flood Insurance Program (NFIP) lapsed four times last year, Congress passed a one year extension of the program. Each of these lapses delayed closings and resulted in considerable uncertainty for buyers, sellers and lenders. These disruptions cost consumers and businesses valuable time, money and unnecessary worry. Congress is now considering H.R. 1309 the Flood Insurance Reform Act of 2011. This Act provides a long-term extension of the NFIP. 

Your participation in this call to action is vital in helping to prevent a repeat of last year’s lapses, avoid delays to closings and protecting homeowners in flood prone areas. 

You can help ALTA by contacting your Member of Congress today to let them know that you strongly support a long-term, sustainable extension of the National Flood Insurance Program. Contact your representative about this important program.

JUDICIARY 

Ocean-Front Property Rights Disputed in U.S., State Supreme Courts

Property rights involving beachfront properties are being disputed at the federal and state level as two separate rulings provide conflicting views. In Florida, the U.S. Supreme Court ruled last year in a unanimous decision against ocean-front owners who argued beach replenishment projects unconstitutionally separated their property from the sea. 
The land owners wanted compensation because they claim beach replenishment projects have lowered the price of their property by reducing their access to the ocean. The debate started about seven years ago when owners from Destin in the Panhandle claimed a beach replenishment project created a 75-foot wide barrier between their homes and the ocean. They claimed this lowered property values because the properties were farther from the water. Read the full story here.

TLTAPAC 

First American Houston - 100% TLTAPAC Participation!

We would like to thank First American Title Company’s Houston Division President Brian Bowman and his Houston branch offices for participating in the TLTAPAC. Bowman challenged everyone at the Kingwood branch to contribute to the TLTAPAC thus kicking off an internal competition in which 100% of six Houston branches contributed. Ultimately, 12 First American branches in Houston participated in some form. Thank you, First American!

First American would also like to challenge title company branches across the state to participate in the TLTAPAC. Make a donation today!

TLTAPAC’s Biennial Race to the Finish!

On your mark. Get set. Go! Get ready for your chance to show just how much you’d pay NOT to walk a mile in our lobby team’s shoes! For one week, from May 23-27, TLTA Director of Government Affairs and Counsel Aaron Day and Legislative Counsel Allen Place, Jr. will wear pedometers while lobbying on behalf of the title industry. 

TLTA introduced the Race to the Finish PAC Fundraiser during the 2009 Legislative Session and in just one week, between the two of them, the TLTA lobby team logged an outstanding 30 miles and helped raise over $3,600 for theTLTAPAC! To get involved in the race, all you have to do is review the pledge form, select a lobby team member, and pledge either an amount per mile or make a one time donation. Make a pledge. or if you have any questions, contact Tedrah Hutchins, Government Affairs Manager at 512.472.6593. 

Don’t Miss These Two Conference Events!

Register now for TLTA’s Annual Conference & Business Meeting June 16-18 in San Antonio and join us on Thursday, June 16for the Bert Massey Classic PAC Golf Tournament. Avid golfers and amateurs alike are invited for a morning of golf followed by an awards ceremony and lunch on the lawn. Registration fee includes green fee, golf cart, refreshments on the course and an awards luncheon.

This year’s conference also features the PAC Breakfast Club. At the Friday breakfast, Evan Smith, Editor in Chief and CEO of The Texas Tribune, will share his perspective on Texas Politics: A Two-Step or a Waltz? The 2011-2012 TLTAPAC Board of Trustees will also be elected and proceeds will support the PAC’s legislative efforts. Veteran legislator and title agent Rep. Drew Darbywill share the inside story on the 82nd Legislative Session at Saturday’s PAC Breakfast. Additional fee applies – view more information here.

Also, Be sure to visit our detailed conference online program to check out our exciting lineup of other events and speakers.

NEWS TO KNOW 

In Memoriam: Buck Eckels

Paul Glenn “Buck” Eckels, 80, passed away Saturday, May 7th, after a brief, brave battle with cancer. Buck was born February 6, 1931, in Temple, Texas before moving to Houston in 1942. He graduated from Texas A&M University in 1952 and remained a loyal and proud Aggie all of his life, establishing a Charitable Trust and the Eckels Endowed Mays Business School Professorship at Texas A&M in 2005.

He negotiated oil leases after the war as a land man for oil and gas businesses in Corpus Christi before starting his career as a title underwriter. In 1976, he purchased Lawyers Title Insurance Company of Houston after working there for several years. Buck owned and ran the company as president, chair and sole stockholder for 30 years before he retired. He was also actively involved with TLTA, serving on several committees and the TLTA Board of Directors in 1996. Buck was well-known and highly regarded for his success and business integrity. Read the full obituary.

Industry Faces Increased Costs to Get Deals Closed

ALTA
More stringent lending requirements and complicated closing instructions are adversely impacting all transactions – not just foreclosures – as it’s taking longer and costing more for title agents to close deals.

Many agents have already reported increased costs due to more intensive searches, curative efforts and tougher underwriting requirements. James Sitterly, president and CEO of three small title companies in New Mexico, said his operations are conducting more extensive searches and taking longer to clear title when working with attorneys to get a payoff. 

“This process creates time and work problems because of delays in obtaining figures to close,” he said. “With the extra hour it takes to do the new and improved HUD, we are adding hours to each closing. I find it impossible to increase my costs when everyone is suffering in this down economy.” Read the full article.

Industry Stats

Indicator Release Date Latest Release Change from Previous Release
30 Year Fixed Mortgage Rates 4/28/11 4.78% -0.02
15 Year Fixed Mortgage Rates 4/28/11 3.97% -0.05
10 Year Treasury Rate 4/29/11 3.32% -0.01
Existing Home Sales (in millions) 4/21/11 5.10 +3.7%
New Home Sales 4/25/10 250,000 +11.1%
Supply of Housing Inventory 3/23/10 7.3 months -1.6 months
Stats from ALTA